So here's the skinny on reverse mortgages. I've heard alot about them over the years, but finally made a point to sit down with a local lender to fully understand them. And like most subjects when you have a firm grasp of them, reverse mortgages aren't nearly as bad as most people (most of whom don't understand them) would have you believe.
Here's how reverse mortgages work: they are age-based loans that don't ever need to be paid on until the home is no longer the primary residence. And the money owed on them can never be higher than the appraised value of the home.
That's a pretty good deal for some people. For many older folks who want to stay in their homes but are struggling with bills, a reverse mortgage gives them access to money that won't need to be paid back until the house sells. And since the balance will never be more than the home's appraised value, the homeowner doesn't have to worry about owing more than they can repay.
Now here are the fine details.
Reverse mortgages are appraisal- and age-based and do not factor in income, debt, credit score, or financial history. Only the home's value and your age matter. The older you are (you have to be at least 62), the more money you can use. (Your age minus 5 is the percentage of the home's appraised value that you get).
Reverse mortgages are expensive to open, about 2-3 times more than home equity loans or refinanced mortgages. For someone who does not plan on staying in the home, they don't make sense.
Because reverse mortgages are leveraged against the equity in the home, the homeowner (or the heirs) will get less money, if any, when the home is sold. For someone who wants to leave money for their heirs from the sale of their home after they die, reverse mortgages may not be the best idea.
Interest rates on reverse mortgages are a little lower than prevailing rates. If you do use money from your reverse mortgage, it is fairly "cheap money". Interest is charged against any money that you pull from the mortgage, but remember--you'll never owe more than the home is worth.
Reverse mortgages actually accrue interest on unused principal. If you open a reverse mortgage, the bank rewards you for not using all available principal. And it's a pretty healthy rate--about what money market accounts charge.
You can choose to use your reverse mortgage one of two ways when you open it: receive monthly payments from it, or use it more like a bank account and only on an as-needed basis. If you open your reverse mortgage with the monthly payout option, your monthly payment will never stop, even if your original principal balance is exceeded, and you'll never owe more than the home is worth. There are some special requirements with this part of it, but it can be a pretty good deal.
There's a lot to chew on here. But the main point is that reverse mortgages are very beneficially to some people and it's worth looking into. The federal government asked banks to come up with these loans to help people stay in their homes longer, so it's not just another gimicky bank loan.
Call me or call your bank to look into it.
Thursday, May 28, 2009
Monday, May 18, 2009
Come On People, Think Objectively!
So I'm in the garage the other day, tinkering with something when I hear my backyard neighbor yell for me. In my backyard is a pit bull chasing after our new kitty. A loose pit bull in a neighborhood filled with little dogs, little cats, and LITTLE KIDS?!!!!
It turns out the one of the neighbors (whom I've never met, or seen for that matter) has this dog.
I waited a few hours after the crisis was averted, to give myself time to think about what I wanted to do or say. I suppose I could have called the cops or ran right over to her house and banged on her door ('cause, man I was HOT about it). But I thought better of it and just chilled out.
And you know, I couldn't just let it lie. A loose pit bull in the neighborhood cannot be ignored. So I knocked on the neighbor's door when I figured out what to say. The first thing I said, after introducing myself, was "Is that your pit bull I saw in my yard chasing my cat?"
Now I waited a very long time after she responed "yes" to give her every opportunity to do what I would have done. "I'm so sorry, I really try to keep him under leash, but he just got away. Is your cat ok?" Stuff like that. That's what I would have said.
You probably know where this is going. It's not at all her problem that her man-killing dog runs around the neighborhood looking for its next victim. I'M the BAD NEIGHBOR for voicing my displeasure. "It's a mixed breed" she said, which apparently makes it ok. Yeah, it looks just like a pit bull, so maybe it's 90% pit bull and 10% something else. So I guess I feel a little bit better--maybe now it won't kill one of the neighborhood kids.
I know what some of you are thinking. He just hates dogs. Not true. I LOVE dogs. I'm getting one this fall, in fact. I love every kind of dog, except the breeds that weren't created and genetically engineered to functional primarily as attackers and maulers.
Look, pit bulls are so genetically altered to bring out their agressive traits that maybe only 5% of pit bull owners can really keep them under contro. Maybe 5%. The other 95% may have good intentions, but it's like handing them a live hand grenade with the pin pulled--it's safe as long as you never let go of it.
So maybe you should think objectively and consider the worst case scenario before you run down to the humane society and bring back your hand grenade....
It turns out the one of the neighbors (whom I've never met, or seen for that matter) has this dog.
I waited a few hours after the crisis was averted, to give myself time to think about what I wanted to do or say. I suppose I could have called the cops or ran right over to her house and banged on her door ('cause, man I was HOT about it). But I thought better of it and just chilled out.
And you know, I couldn't just let it lie. A loose pit bull in the neighborhood cannot be ignored. So I knocked on the neighbor's door when I figured out what to say. The first thing I said, after introducing myself, was "Is that your pit bull I saw in my yard chasing my cat?"
Now I waited a very long time after she responed "yes" to give her every opportunity to do what I would have done. "I'm so sorry, I really try to keep him under leash, but he just got away. Is your cat ok?" Stuff like that. That's what I would have said.
You probably know where this is going. It's not at all her problem that her man-killing dog runs around the neighborhood looking for its next victim. I'M the BAD NEIGHBOR for voicing my displeasure. "It's a mixed breed" she said, which apparently makes it ok. Yeah, it looks just like a pit bull, so maybe it's 90% pit bull and 10% something else. So I guess I feel a little bit better--maybe now it won't kill one of the neighborhood kids.
I know what some of you are thinking. He just hates dogs. Not true. I LOVE dogs. I'm getting one this fall, in fact. I love every kind of dog, except the breeds that weren't created and genetically engineered to functional primarily as attackers and maulers.
Look, pit bulls are so genetically altered to bring out their agressive traits that maybe only 5% of pit bull owners can really keep them under contro. Maybe 5%. The other 95% may have good intentions, but it's like handing them a live hand grenade with the pin pulled--it's safe as long as you never let go of it.
So maybe you should think objectively and consider the worst case scenario before you run down to the humane society and bring back your hand grenade....
Wednesday, May 13, 2009
First Time Home Buyer Tax Credit
Ok, so here's the deal when it comes to the first-time home buyer tax credit:
If you buy your first house this year, the goverment will send you a check worth 10% of the purchase price of the house, up to a maximum of $8,000. That's free money! No obligation to pay back.
Now the details. You have to be a first-time buyer--someone who has not sold a home in the last three years. If you've owned homes before, but have rented for the last three years, you'll qualify.
And you have to keep the house you buy for at least three years. If you sell it before three years is up, you'll have to pay back to the government some money. If you sell after 1-1/2 years, you'd owe half, for example.
The house has to be your primary residence. If you start renting it out within the three year period, you'll owe some money back.
There isn't a whole lot of fine print--it's really a great deal. If you think you might buy a house in the next few years, for goodness sake do it this year. You have to settle on the house before Dec 2nd, 2009 to be eligible. And you get your money quickly--just fill out an amended tax return, with a copy of your settlement statement and you'll get a BIG check in the mail in a matter of weeks.
This is a once-in-a-lifetime opportunity. Go get yourself a house!
If you buy your first house this year, the goverment will send you a check worth 10% of the purchase price of the house, up to a maximum of $8,000. That's free money! No obligation to pay back.
Now the details. You have to be a first-time buyer--someone who has not sold a home in the last three years. If you've owned homes before, but have rented for the last three years, you'll qualify.
And you have to keep the house you buy for at least three years. If you sell it before three years is up, you'll have to pay back to the government some money. If you sell after 1-1/2 years, you'd owe half, for example.
The house has to be your primary residence. If you start renting it out within the three year period, you'll owe some money back.
There isn't a whole lot of fine print--it's really a great deal. If you think you might buy a house in the next few years, for goodness sake do it this year. You have to settle on the house before Dec 2nd, 2009 to be eligible. And you get your money quickly--just fill out an amended tax return, with a copy of your settlement statement and you'll get a BIG check in the mail in a matter of weeks.
This is a once-in-a-lifetime opportunity. Go get yourself a house!
Saturday, May 2, 2009
Are Realtors Really Retards?
So i checked out Craigslist for the first time today. Yeah, I know--I'm a little bit behind the rest of society. Hey, I heard about these cool things called cell phones where you can actually leave your house and still call people....
Anyway, besides being surprised at how incredibly plain the site looks, I was shocked when I checked out some of the chat rooms/forums to find how ignorant and hateful some of the participants were. I mean, one guy (who posted a pic of himself on a toilet) calls himself "realtorsareretards". It seems that his whole Craigslist mission is to slam real estate agents at every opportunity. And he's not the only one who seems to enjoy verbally abusing just about everyone involved in real estate.
I must be naive, or at least too idealistic for Craigslist. I went into the real estate forum thinking that maybe I could get involved in a discussion and impart some wisdom. I've had thousands of great conversations with folks over the years and I can't remember ever hearing someone say, "Gee John, you're really a retard". I mean, maybe I've said some stuff that someone didn't completely agree with, but come on now--retarded?
Look, I'm not here to vent or slam Craigslist. The reason for this particular blog is to warn everyone to be careful what you run into. If you want good professional advice on any subject, seek it from a professional. I thought about flagging some of the discussions, but I'm afraid that Craigslist is already too far gone.
Anyway, besides being surprised at how incredibly plain the site looks, I was shocked when I checked out some of the chat rooms/forums to find how ignorant and hateful some of the participants were. I mean, one guy (who posted a pic of himself on a toilet) calls himself "realtorsareretards". It seems that his whole Craigslist mission is to slam real estate agents at every opportunity. And he's not the only one who seems to enjoy verbally abusing just about everyone involved in real estate.
I must be naive, or at least too idealistic for Craigslist. I went into the real estate forum thinking that maybe I could get involved in a discussion and impart some wisdom. I've had thousands of great conversations with folks over the years and I can't remember ever hearing someone say, "Gee John, you're really a retard". I mean, maybe I've said some stuff that someone didn't completely agree with, but come on now--retarded?
Look, I'm not here to vent or slam Craigslist. The reason for this particular blog is to warn everyone to be careful what you run into. If you want good professional advice on any subject, seek it from a professional. I thought about flagging some of the discussions, but I'm afraid that Craigslist is already too far gone.
Don't Believe the Hype!
Monday, July 2, 2007
It Ain't As Bad As You Think
Ahhhhhhh!!!! I'm tired of hearing how bad real estate is around here. It's not! According to data in our local Multiple Listing Service, the average home sale price in Blair County has increased 6% in the last year. INCREASED 6%!
Blair County is such an isolated market that many times what goes on in other markets never does happen here.
The problem that were ARE having in Blair County is low inventory. There are less homes for sale right now than in years past. And I think it's because everyone thinks that their home will not sell or will not sell for a fair price because the "market's down".
I can't tell you how many buyers I represent that cannot find a good home. Nice homes are few and far between at a time of year when it shouldn't be this hard to find one. It's very frustrating as an agent....
So....
If you are putting off moving because you believe what you hear and read, call me. I'll give you the straight dope.
Location Location Location
Wednesday, July 18, 2007
Location, Location, Location
It may be a tired, worn-out phrase in my profession, but "location, location, location" is worn out for a reason--it's everything in this business.
I recently helped a couple move to this area from the Midwest. Since they had no children, the school district was not a consideration for them. And since both were self-employed with an internet business, work location was also not a factor. Just about any house in their price range would work. Sounds easy right?....
Well, we looked at houses for weeks from one end of the market to the other. Since just about any house in the price range would work, just about EVERY house in the price range seemed right. It was very frustrating for them to decide. The ironic thing was that once they did find the right home, the biggest factor they cited on why they chose this home was "because of the area".
Even if you're moving within the zip code, it makes things easier to settle on a street or neighborhood. Even if you don't have children, the person who will buy your home when you eventually move on may, so schools should still be considered.
Location should also be a top consideration for investors too. Just because it's a rental doesn't mean that renters will live in a bad area. In fact, renters will pay more and will stay longer in apartments in nicer areas.
And location makes it easier to sell the "flip houses". Don't be tempted to buy that fixer-upper just because it's cheap. If you can't sell it (because it's in an "iffy" area), it doesn't matter what you paid for it--you paid too much! It is so much easier to sell a nice house in a nice area than it is to sell a nice house in a poor area.
I recently helped a couple move to this area from the Midwest. Since they had no children, the school district was not a consideration for them. And since both were self-employed with an internet business, work location was also not a factor. Just about any house in their price range would work. Sounds easy right?....
Well, we looked at houses for weeks from one end of the market to the other. Since just about any house in the price range would work, just about EVERY house in the price range seemed right. It was very frustrating for them to decide. The ironic thing was that once they did find the right home, the biggest factor they cited on why they chose this home was "because of the area".
Even if you're moving within the zip code, it makes things easier to settle on a street or neighborhood. Even if you don't have children, the person who will buy your home when you eventually move on may, so schools should still be considered.
Location should also be a top consideration for investors too. Just because it's a rental doesn't mean that renters will live in a bad area. In fact, renters will pay more and will stay longer in apartments in nicer areas.
And location makes it easier to sell the "flip houses". Don't be tempted to buy that fixer-upper just because it's cheap. If you can't sell it (because it's in an "iffy" area), it doesn't matter what you paid for it--you paid too much! It is so much easier to sell a nice house in a nice area than it is to sell a nice house in a poor area.
Flipping: Truth vs. Reality
Friday, August 17, 2007
Flipping Houses: TV versus Reality
One reason why home improvement shows are so popular on TV is that the folks on the shows make it look so easy. But what the TV shows don't show you is all of the planning and organizing that's done way before the first hammer is swung that make a successful flip.
For every profitable flip you see on TV there are a hundred that didn't work out. I can point to several houses on the market right now in our area that started out as flip houses, but are now incomplete projects.
Just wanting to be successful is no guarantee. And working hard doesn't always make up for mistakes. The most important part of flipping houses is knowing what the finished home will sell for, regardless of how fancy you remodel the house.
This is very important to understand: Blair County is not Southern California or Phoenix or Miami. A 3 bedroom 1 bath house in good condition in a $60,000 neighborhood will sell for $60,000. Period. That same house with granite countertops, a jetted tub, custom made cabinets, and new turf in the yard will still sell for $60,000.
There's good money in flipping houses around here (I know this personally). Use a realtor to give you good advice on what to pay for the house, what buyers would like to see in the house, and what a reasonable selling price would be. Then do the math: get good estimates on the work and see if there's any profit in the house.
Better yet, call me if you want to give it a try!
0 comments
For every profitable flip you see on TV there are a hundred that didn't work out. I can point to several houses on the market right now in our area that started out as flip houses, but are now incomplete projects.
Just wanting to be successful is no guarantee. And working hard doesn't always make up for mistakes. The most important part of flipping houses is knowing what the finished home will sell for, regardless of how fancy you remodel the house.
This is very important to understand: Blair County is not Southern California or Phoenix or Miami. A 3 bedroom 1 bath house in good condition in a $60,000 neighborhood will sell for $60,000. Period. That same house with granite countertops, a jetted tub, custom made cabinets, and new turf in the yard will still sell for $60,000.
There's good money in flipping houses around here (I know this personally). Use a realtor to give you good advice on what to pay for the house, what buyers would like to see in the house, and what a reasonable selling price would be. Then do the math: get good estimates on the work and see if there's any profit in the house.
Better yet, call me if you want to give it a try!
Want to move up? Do it now despite the "buyer's market"!
Thursday, January 17, 2008
Take Advantage of the Market--Upgrade Now!
“We’d love to get a bigger place, but I think we’ll wait until the market improves.”
I’ve heard that statement several times lately, and it occurred to me that maybe now is when you should upgrade because the market is soft. Let me explain (put your math hats on, please).
For many years in this market, homes sold for 95% of their list price, on average. In other words, homeowners were giving 5% discounts. A lot of these homeowners, then, became home buyers, and, on average, would pay about 95% of the list price for their new home.
Mathematically it looked like this:
Old House
Listed For $100,000
Sold For $90,000 (%5 discount)
New House
Listed For $200,000
Bought For $190,000 (5% discount)
Difference: $190,000 - $90,000 = $95,000
The Advantage of a Soft Market
Now let’s take a look at what’s going on right now. I’ll agree that it’s more of a buyer’s market—homeowners, in many cases, are giving discounts of 10% or more. As you can see, that’s not all bad for those of you who are upgrading or wanting to build a new home:
Old House
Listed For $100,000
Sold For $90,000 (10% discount)
New House
Listed For $200,000
Bought For $180,000 (10% discount)
Difference: $180,000 - $90,000 = $90,000
These folks had to give a 10% discount to sell their old house, but got the same discount when buying their new one. And since they were upgrading, the discount on the new house gave them a greater dollar amount, thus they “saved” $5,000. (By the way, this opportunity applies to those of you who want to build a house too. The new construction market is even softer than the existing home market.)
Not only can you take advantage of this market to save some money during your upgrade, you have a better shot at buying your new home using a sale and settlement contingency. This type of contingency allows you to get out of the contract on the new home (with your deposit) if you cannot find a buyer for your old home. In hot markets, most homeowners will turn down an offer with a sale and settlement contingency because they know that another offer will be coming soon without one. In slower markets like this one, many homeowners are glad to just get an offer and will accept the contingencies.
We all know what happens when the market is hot: you find a great house, but so do three other people. Then you feel obligated to offer a little bit more than you would have if you were the only buyer. Or, you keep finding the perfect house, a day after it went under contract. So, if you can find the house you want at a significant value, don’t hesitate to make the move.
I’ve heard that statement several times lately, and it occurred to me that maybe now is when you should upgrade because the market is soft. Let me explain (put your math hats on, please).
For many years in this market, homes sold for 95% of their list price, on average. In other words, homeowners were giving 5% discounts. A lot of these homeowners, then, became home buyers, and, on average, would pay about 95% of the list price for their new home.
Mathematically it looked like this:
Old House
Listed For $100,000
Sold For $90,000 (%5 discount)
New House
Listed For $200,000
Bought For $190,000 (5% discount)
Difference: $190,000 - $90,000 = $95,000
The Advantage of a Soft Market
Now let’s take a look at what’s going on right now. I’ll agree that it’s more of a buyer’s market—homeowners, in many cases, are giving discounts of 10% or more. As you can see, that’s not all bad for those of you who are upgrading or wanting to build a new home:
Old House
Listed For $100,000
Sold For $90,000 (10% discount)
New House
Listed For $200,000
Bought For $180,000 (10% discount)
Difference: $180,000 - $90,000 = $90,000
These folks had to give a 10% discount to sell their old house, but got the same discount when buying their new one. And since they were upgrading, the discount on the new house gave them a greater dollar amount, thus they “saved” $5,000. (By the way, this opportunity applies to those of you who want to build a house too. The new construction market is even softer than the existing home market.)
Not only can you take advantage of this market to save some money during your upgrade, you have a better shot at buying your new home using a sale and settlement contingency. This type of contingency allows you to get out of the contract on the new home (with your deposit) if you cannot find a buyer for your old home. In hot markets, most homeowners will turn down an offer with a sale and settlement contingency because they know that another offer will be coming soon without one. In slower markets like this one, many homeowners are glad to just get an offer and will accept the contingencies.
We all know what happens when the market is hot: you find a great house, but so do three other people. Then you feel obligated to offer a little bit more than you would have if you were the only buyer. Or, you keep finding the perfect house, a day after it went under contract. So, if you can find the house you want at a significant value, don’t hesitate to make the move.
Wednesday, January 30, 2008
Tax Assessments: Voodoo or Fact?
I get asked quite often about how taxes for a particular home are calculated. So much so that recently I arranged a meeting with one of the County's tax assessors to ask how it's done. This brief meeting left me with more questions than answers...
So the other day a made a copy of my home's tax assessment and set about trying to understand all of the calucaltions. (This information is open to the public at the tax assessor's office in the basement of the "old" courthouse in Hollidaysburg. In fact, tax assessments can be appealed and, in some cases, lowered to reduce your taxes if they are unfairly high. Tax appeal time is in September every year, so make sure you fill out the proper appeal form in August to schedule your meeting.) Anyway, back to the purpose of this blog...
Your home's assessed value is based on its square footage and its replacement value, anything considered an "upgrade" will raise your taxes. In fact, I think the main reason you have to apply for a building permit is so that the tax assessor knows when you've improved your house so he can raise your taxes. Upgrades would be brick or stone exterior, finished basement, cedar shake shingles, hwd or tile flooring, finished attic, radiant floor heating, enclosed and finished porch, and so on. If you think your taxes are too high because someone you know has lower taxes, compare the two homes closely, inside and out.
Age and condition are also major factors in determining taxes. Identical houses built many years apart will not have the same assessment value because the tax assessor devalues houses the older they get. This is why new construction always has higher taxes.
Location, to a small extent, affects taxes too. Each of the 22 municipalities in Blair County have different millages. I don't consider this very important because I've never heard of anyone wanting to live in "X" township because the taxes are lower, and because their isn't that big of a difference from the lowest to the highest taxing body anyway.
So I hope I answered some questions. You can always call me...
John
0 comments
So the other day a made a copy of my home's tax assessment and set about trying to understand all of the calucaltions. (This information is open to the public at the tax assessor's office in the basement of the "old" courthouse in Hollidaysburg. In fact, tax assessments can be appealed and, in some cases, lowered to reduce your taxes if they are unfairly high. Tax appeal time is in September every year, so make sure you fill out the proper appeal form in August to schedule your meeting.) Anyway, back to the purpose of this blog...
Your home's assessed value is based on its square footage and its replacement value, anything considered an "upgrade" will raise your taxes. In fact, I think the main reason you have to apply for a building permit is so that the tax assessor knows when you've improved your house so he can raise your taxes. Upgrades would be brick or stone exterior, finished basement, cedar shake shingles, hwd or tile flooring, finished attic, radiant floor heating, enclosed and finished porch, and so on. If you think your taxes are too high because someone you know has lower taxes, compare the two homes closely, inside and out.
Age and condition are also major factors in determining taxes. Identical houses built many years apart will not have the same assessment value because the tax assessor devalues houses the older they get. This is why new construction always has higher taxes.
Location, to a small extent, affects taxes too. Each of the 22 municipalities in Blair County have different millages. I don't consider this very important because I've never heard of anyone wanting to live in "X" township because the taxes are lower, and because their isn't that big of a difference from the lowest to the highest taxing body anyway.
So I hope I answered some questions. You can always call me...
John
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